As an affiliate marketer, you are running a business that does not seem to have tangible means of measurement of success. Typically, people only measure success via sales
Here, we will be discussing:
- It’s meaning
- How effective it is
- How to interpret these numbers
- How to calculate this metric
Some affiliate partners can readily provide you with this number, but it is a lot better if you know how to calculate it yourself.
What Does EPC Stand for in Affiliate Marketing?
EPC stands for Earnings per Click. It is a payment model for affiliate marketers where they get paid through the number of clicks they generate for the affiliate partners or merchants.
As an affiliate marketer, your main task is to advertise and get your links out on the web. This link, if clicked by a potential customer, will lead the customer to your affiliate partner’s website.
For example, you may be trying to promote a product sold on Amazon. As an affiliate, you will receive a personal link to that product, which you have to advertise online
Now, not all clicks will result in a sale. If the product sells at $100, and your commission is $10, which is 10%, then the EPC or earnings per click is equal to the total commission you earned divided by the total clicks for that link.
How Do You C
As mentioned earlier, the formula for EPC is equal to the rate of commission earned divided by the total clicks.
In the example given, there may only be two people who click your link to Amazon. One person purchased for $100 and the other did not make a purchase. In this situation, you will earn a commission of $10.
Now, if you divide your commission of $10 by two clicks, your EPC is $10/2 = $5.
If there are 100 clicks and only one person made a purchase, you will still earn $10. But your EPC will be lower at $10/100 = $0.10.
Now, this can be misleading, and another calculation is involved. EPC is commonly shown by multiples of 100s. What the EPC tells you is how much money you earned every 100 clicks.
In our example, let us say that you got 100 clicks, and the total commission you received is $10. If you divide $10 by 100, the EPC is $0.10.
If your total click is 1,000, the EPC will be equal to 1,000 clicks divided by 100 = 10. Now, you divide ten by $10 and the number you get $1. Your EPC is $1 per 100 clicks.
It is a little confusing to answer the question: What Does EPC Stand for in Affiliate Marketing?
There are two different formulas, and you are better off following the second one as this is the standard that most affiliate marketers follow.
oes EPC Help Me as an Affiliate Marketer?
EPC is an important metric because you know how much money it generates for you on your ads per 100 clicks.
If you know how much you are earning in commission revenue per 100 clicks, you surely know how much you paid for that advertising cost for 100 clicks.
If you have both numbers, you will realize whether the advertising cost makes business sense or not. Let us say that you spent $100 on a Facebook ad for one affiliate link on Amazon.
Facebook will show you how many clicks that ad has generated, how many people saw your ad, and then you can determine if paying for that advertisement is making you money or making you lose it.
Here is an example of analyzing whether you should continue the ad or not.
- Facebook ad cost: $100
- People who saw the ad: 37,000
- People who clicked the link: 1,000
- People who purchase the $100 product: 7
- Revenue per sale: $10
If seven people bought the product, your total revenue is $10 X 7 = $70. Your EPC is 1,000/100 = 10. $70/10 = $0.142857143.
The cost per 100 clicks on Facebook, as far as advertising is concerned, is 1,000/100 = 10. $100/10 = $10.
For every $10 you spend on the ad to generate 100 clicks, you are only earning a commission of $0.142857143.
You can either make a better ad or spend less on that ad. You can also reconsider looking for products that have higher revenue.
How Do You Boost Your Sales Revenues Using EPC?
Now that you know the answer to the question “What does EPC stand for in affiliate marketing?”, it is time that you apply this knowledge to help you make better business decisions.
Here are some tips on how you can manage your affiliate business better with EPC:
Calculate each EPC – with each affiliate link, calculate your EPC. If you know your EPC per link, you will get a clear picture of how much each program is earning.
You can discard the others that are not worth your time, and then focus your efforts on those that have higher EPC values.
Choose the best advertising platform – if the EPC coming from your Facebook ads is yielding better results than your Instagram ads, then you may need to reconsider your advertising approach
Keep Tracking and Tweaking – since you know how to calculate your EPC, you can track whether your action plans are working.
After a while, you should have historical data and then compare the results of your activities, and then determine which ones worked the best for you.
Reduce Advertising Cost – if you know how much money comes in from an ad campaign, you can determine if you should reduce the cost or stop advertising on that platform.
You can also experiment on A/B testing and find out which ad is more effective in generating not just clicks but also sales.
Work Out Earnings – with EPC, you will find out if low-value products are better for your business than the high-value ones, then you can decide which one to focus on.
You may notice that high-value products actually generate higher EPC concerning your advertising costs than the low-value ones, so focus on it as you will earn more money from it.
EPC is just one metric to determine your success as an affiliate marketer. A word of caution, though, is that you should not be stuck with analysis paralysis
The most important aspect of the EPC is for you to determine the causes of your low earnings, and then take the appropriate action to correct these errors.
You should be able to let go of affiliate links that do not generate high EPC, especially so if these are the same links that are costing you a lot of money on advertising.
With EPC, you can streamline your affiliate business process, and then you can make wise and informed business decisions to help you grow your affiliate marketing revenue.